Indiana's Exports to the World

Across the United States, central states tend to have a much smaller
share of U.S. exports than Midwest and coastal states. Indiana's
share was on par with Wisconsin and Kentucky, ranging from 1 percent
to 2.9 percent. Indiana exports have increased from about $11 billion
in 1996 to $21.5 billion in 2005.

Indiana's exports grew $2.4 billion between 2004 and 2005 for a
gain of 12.4 percent. Figure 1 shows Indiana exports
grew faster than the nation in 2005, as was true for most of the previous
years. However, since 2002 the state has seen its lead over the nation
cut in half each subsequent year.

Figure 1: Percent Change in Indiana and U.S. Exports

Figure 2 shows the path of Indiana exports once they
leave the state, which ultimately encompasses the globe; however, the
difference in export magnitude among the countries is significant. Whereas
Cape Verde purchased $3,000 worth of Indiana exports in 2005, Canada
purchased $9.6 billion.

Figure 2: Indiana's Export Destinations

Top Export Destinations

The top 10 destinations comprised 84.3 percent of Indiana's export
sales. Figure 3 clearly shows that, although Indiana shipped exports
to 198 countries in 2005, a select few received the bulk of the state's
exports.

Canada was still Indiana's largest export destination with purchases
of $9.6 billion in 2005, which was $1 billion more than 2004 (see Table
1). That represented an 11.9 percent increase from the previous year.
Indiana exports to Canada in 2005 were 3.6 times the value of the second
largest export destination (Mexico) and almost 32 times that of the 10th
largest export destination (the Korean Republic).

Table 1: Indiana's Top 10 Export Destinations: Value of and Change
in Exports

Indiana's exports to China exploded with an over-the-year increase
of 42 percent; that is 17 percentage points greater than the previous
year's growth rate. Where China outstripped the other top export
destinations in growth, the Korean Republic saw the biggest improvement
over last year in its rate of growth. Indiana's export growth rates
to the Korean Republic increased almost five-fold from 4.9 percent to
23.5 percent from 2004 to 2005, an 18.6 percentage point increase.

Australia and France also had growth rates over 20 percent. Although
the entire top 10 destinations had increases in Indiana exports, several
of the top 10 destinations saw their growth rates slow in 2005. Mexico,
Netherlands, Japan, France and Canada had slower growth in the number
of exports shipped from Indiana.

The United Kingdom's growth rate in 2005 has tripled, going from
6.0 percent to 18.3 percent. Exports to Germany picked up steam in 2005,
with a 14.6 percentage point increase in the rate of growth over the
previous year.

The total share of the top 10 country destinations gained 0.3 percentage
points from 2004 to reach 84.3 percent for 2005; this means the state
has become a little more concentrated in its export sales. The increase
was largely due to an increase in France's share of 0.7 percentage
points and an increase in China's share of 0.4 percentage points.
Canada made up 44.5 percent of Indiana exports in 2005, compared with
44.7 percent in 2004. Canada's share of Indiana exports has declined
by 5.1 percentage points since 1996. Canada's share today is 9.8
percentage points lower than the high reached in 1999 and 1.3 percentage
points higher than the low reached in 2001.

Spain, which had a 1.4 percent share in 2004, dropped out of the top
10 list in 2005. Now Spain is the 16th largest export destination for
the state. Meanwhile Australia continues its dance between the ninth
and 10th rank for Indiana's export destinations, and for 2005 it
was the former. The Korean Republic continues to bounce in and out of
the top 10, assuming the 10th slot in 2005.

Figure 4 shows all the countries where Indiana exports
increased. Note that countries experiencing the largest percent increases
had little export volume to begin with, so increasing by large magnitudes
is very probable.

There are two entries for each country—one for the largest export
sales increase and one for the largest decrease. The export amount is
shown in an attempt to visually depict which industries are having the
biggest net effect. In this way, we clearly see the countries and industries
that accounted most for change in 2005.

The biggest increases in Indiana exports to the top 10 export destinations
(indicated by the largest numbers in the table) came from vehicles to
Canada ($533 million) and pharmaceutical products to France ($180 million),
United Kingdom ($162 million), Germany ($64 million) and the Netherlands
($33 million).

The largest declines in Indiana exports sales to the top 10 country destinations
(indicated by the smallest numbers in the table) came from vehicles to
Mexico (-$190 million) and the United Kingdom (-$22 million) and plastic
to Japan (-$13 million).

The size and number of entries in each column show the impact of each
industry to the total change in Indiana exports in 2005. Vehicles and
pharmaceutical products each have six entries, indicating the sectors' importance
for changes in Indiana exports to the top 10 countries. There has been
a reversal since 2004, when vehicle exports to the world contributed
34 percent of the change versus pharmaceutical products' 9 percent.
In 2005, pharmaceutical exports contributed 19 percent, while vehicles
only contributed 15 percent to the change in the amount of exports from
Indiana to the world. Despite the gains made in pharmaceutical exports
in 2005, they only constitute 7 percent of Indiana exports to the world
while vehicles are 27 percent. However, if pharmaceutical exports growth
rates continue to outperform vehicles, then this sector will continue
to get a bigger piece of the pie and move up in the rankings of Indiana's
top commodities, as it has done since 1996.